Spirit AeroSystems Holdings, Inc.

SPR

US8485741099

Aerospace & Defense

Market Closed - Nyse Other stock markets 04:00:02 2024-04-24 pm EDT			5-day change	1st Jan Change
31.54 ^USD	-1.84%		-5.48%	-0.76%

Apr. 24	Global markets live: Heineken, AT&T Hasbro, Visa, Boeing...
Apr. 24	The return of bad news is good news

Spirit AeroSystems : Q3 2020 Earnings Call Transcript

November 04, 2020 at 11:51 am EST

Corrected Transcript

03-Nov-2020

Spirit AeroSystems Holdings, Inc. (SPR)

Q3 2020 Earnings Call

	Total Pages: 27
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

CORPORATE PARTICIPANTS

Ryan Avey	Mark J. Suchinski
Director of Investor Relations, Spirit AeroSystems Holdings, Inc.	Chief Financial Officer & Senior Vice President, Spirit AeroSystems
Thomas C. Gentile	Holdings, Inc.

President, Chief Executive Officer & Director, Spirit AeroSystems
Holdings, Inc.

......................................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Myles Walton	George D. Shapiro
Analyst, UBS Securities LLC	Analyst, Shapiro Research LLC
Carter Copeland	David Strauss
Analyst, Melius Research LLC	Analyst, Barclays Capital, Inc.
Robert Spingarn	Cai von Rumohr
Analyst, Credit Suisse Securities (USA) LLC	Analyst, Cowen Inc
Kristine Tan Liwag	Hunter Keay
Analyst, Morgan Stanley	Analyst, Wolfe Research LLC
Sheila Kahyaoglu	Ronald J. Epstein
Analyst, Jefferies LLC	Analyst, Bank of America Merrill Lynch
Douglas S. Harned	Noah Poponak
Analyst, Sanford C. Bernstein & Co. LLC	Analyst, Goldman Sachs & Co. LLC
Ken Herbert	Peter J. Arment
Analyst, Canaccord Genuity LLC	Analyst, Robert W. Baird & Co., Inc.
Seth M. Seifman	Michael Ciarmoli
Analyst, JPMorgan Securities LLC	Analyst, Truist Securities, Inc.
Jon Raviv
Analyst, Citigroup Global Markets, Inc.

	2
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

MANAGEMENT DISCUSSION SECTION

Operator: Good morning, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc. Third Quarter 2020 Earnings Conference Call. My name is Cole and I'll be your coordinator today. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the presentation over to Ryan Avey, Director of Investor Relations and Financial Planning and Analysis. Please proceed.

Ryan Avey

Director of Investor Relations, Spirit AeroSystems Holdings, Inc.

Thank you, Cole, and good morning, everyone. Welcome to Spirit's third quarter 2020 earnings call. I'm Ryan Avey, Director of Investor Relations, and Financial Planning and Analysis and with me today are Spirit's President and Chief Executive Officer, Tom Gentile; and Spirit's Senior Vice President and Chief Financial Officer, Mark Suchinski.

After opening comments by Tom and Mark regarding our performance and outlook, we will take your questions. In order to allow everyone to participate in the question-and-answer segment, we ask that you limit yourself to one question, please.

Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our earnings release, in our SEC filings and in the forward-looking statement at the end of this web presentation. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. And as a reminder, you can follow today's broadcast and slide presentation on our website at investor.spiritaero.com.

With that, I would like to turn the call over to our Chief Executive Officer, Tom Gentile.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thank you, Ryan, and good morning, everyone. Welcome to Spirit's third quarter 2020 earnings call. The global aviation industry continues to struggle with the historic reduction in air traffic caused by the COVID-19 pandemic which has created significant challenges for both airlines and aircraft manufacturers. As the pandemic unfolded we quickly took actions to reduce costs and preserve liquidity. As we mentioned in last quarter's call, we have implemented about a $1 billion of annualized cost reduction actions or a 40% reduction in the nonmaterial base. We've also made the very difficult decision to reduce the head count of our commercial aviation programs by 44% which is more than 8,000 people. Most recently we announced the closure of our McAlester, Oklahoma site, which just 3-axis machining and assembly for Boeing programs.

Most of the work from McAlester will now move to our Tulsa and Wichita facilities. Our biggest program is the 737 MAX and we have been encouraged by the news on the continued progress Boeing has been making with the FAA and global regulators to return the aircraft to service. Completing of the certification flights, a joint report from United States, Canada, Brazil and the European Union civil aviation authorities, which was incorporated in the

	3
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

FAA's draft flight standardization board report are all key milestones for the program. We are proud partner on the MAX and make 70% of the structure. We are looking forward to seeing the airplane safely back in service.

For 2021, we are planning 737 production deliveries to support Boeing's production requirements. Boeing has indicated that they will be at a rate of 31 aircraft per month by early 2022. Through 2021 we also plan to reduce the current buffer inventory of 128 737 shipsets We will lag Boeing's production rates by about five units per month and plan to decrease the inventory of shipsets to a permanent buffer of 20 units to 25 units. The production rates on the other programs for Boeing and Airbus remain as they have reported.

Based on our forecasted production, we estimate our free cash flow for 2021 will be negative, but significantly improved from 2020's usage. This estimate of 2021 cash usage does not include the Bombardier assets that we just acquired or cash tax benefits, both of which will be positive. We expect free cash flow to be positive in 2022.

Over the last few months three actions have helped improve our overall liquidity position. First, in late September we mutually terminated our agreement to acquire ASCO, eliminating a capital outlay of $420 million. While we were disappointed that the deal did not close, we have tremendous respect for ASCO and we'll continue working with them as a valued supplier. Second, we also took actions to restructure our balance sheet and improve our financial flexibility. We repaid our term loans of $430 million during the quarter and terminated the 2018 credit facility on October 5. We also raised $900 million of new secured debt. And third, we recently closed the acquisition of select Bombardier assets for $865 million, which is 20% reduction from the original enterprise value. The deal consists of a $275 million cash payment to the sellers, a 45% reduction from the original cash consideration of $500 million. The $865 million deal value includes certain liabilities for pension and government incentives. These three actions result in an adjusted Q3 liquidity position of $2 billion. Mark will provide further details a little bit later.

Now that we closed the Bombardier acquisition, we are thrilled to welcome our newest colleagues in Belfast, Casablanca and Dallas. The addition help accelerate our strategic transformation by providing more Airbus content, aftermarket business, defense and low cost country operations. The Airbus content includes the composite wing for the A220, which leverages a state of the art fabrication process known as resin transfer infusion. As a smaller narrow body aircraft the A220 will benefit from the quicker recovery of domestic air travel around the world after COVID-19.

In general, Spirit will benefit from this higher domestic demand since 85% of our unit backlog are narrow-body aircraft. The acquisition also significantly increases our aftermarket and maintenance repair and overhaul business. Their focus on Airbus repairs and presence in the European market will complement Spirit's existing expertise with Boeing repairs and presence in the US. Spirit also secures exclusivity on Bombardier's business jet programs and is now one of their largest suppliers. And we expand our Rolls-Royce relationship with work on the BR710 and Trent 700 engine nacelle components.

In addition the acquisition includes a world-class manufacturing facility in Morocco with a highly trained workforce located in an aerospace manufacturing cluster. The facility has a wide range of experience with flight controls, engine nacelles, and fuselage sections and has an extremely competitive cost structure.

Finally, the Bombardier acquisition also establishes a robust path for Spirit to participate in the evaluation and development efforts for the UK's next generation Tempest fighter program. Spirit's leading aerostructures technology capability along with a larger footprint in the UK is well-suited for us to become a strong Team Tempest industrial partner. This opportunity fits nicely into Spirit's overall strategy of expanding our defense

	4
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

business, which by the way realized a 20% growth rate in 2020 revenue. We expect more than 15% growth in our defense business in 2021.

In summary, the acquisition of the Bombardier aerostructures assets accelerated the diversification of our customer base. In 2021, based on preliminary estimates we expect Boeing commercial revenue to account for 45% of our total revenue and Airbus at 24%, defense at 15%, business and regional jets at 8% and aftermarket at 8%. The revised enterprise value from the Bombardier acquisition of $865 million represents a multiple of 8.8 -

times expected 2020 EBITDA, adjusted to remove one-time items. Our plan is to generate synergies in a number of areas including the supply chain, facility consolidation and overhead reduction over the next three years. After taking into account the expected synergies of 6% of revenue, the adjusted EBITDA multiple will be

times. Our preliminary estimate of 2021 revenue for the Bombardier assets that we just acquired is between $700 million and $800 million.

One other highlight for the quarter was the work we did to manufacture ventilators in support of the battle against COVID-19. After building a state of the art production facility, logistics system and global supply chain, the Spirit team working with our partner Vyaire successfully delivered 20,000 critical care ventilators to US customers and customers in more than 20 different countries. The contract was on a cost plus basis and was accretive to our results. Spirit is very proud of our partnership with Vyaire to meet the demand for lifesaving ventilators around the world.

With that I'll turn it over to Mark to take you through our detailed third quarter results. Mark?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Thank you, Tom, and good morning, everyone. I hope everyone is doing well and staying healthy. As Tom mentioned in his opening remarks, Spirit as well as the overall aviation industry are in the early stages of a multi- year recovery and we expect to continue to face near-term challenges. Throughout this year our teams have responded well to the changes brought about by the COVID pandemic. We have made significant adjustments in order to adapt our cost structure to our customers' lower production levels, and we'll continue to adjust with the goal of emerging as a stronger company

With our long term growth and diversification strategy and focus, we are pleased to have closed on the acquisition of select assets of Bombardier. This acquisition is key to our strategic transformation efforts and the additional [ph] work (10:18) content with Airbus and aftermarket will position us while going into the future.

Now let's move to our third quarter results. Please turn to slide 4. Revenue for the quarter was $806 million down 58% from the same quarter last year. This reduction was primarily due to the lower production rate on the 737 MAX resulting from the continued grounding of the program and the significant impacts of COVID-19 pandemic. Production rates across all of our commercial programs continued to be negatively impacted by COVID-19. We delivered 15 737 shipsets in the quarter compared to 154 in the same period of 2019. Overall deliveries decreased to 206 shipsets compared to 437 shipsets in the same quarter of last year.

Let's now turn to earnings per share on slide 5. In the quarter, we reported earnings per share of negative $1.50 per share compared to a $1.26 per share in the same quarter last year. Adjusted EPS was negative $1.34 per share compared to positive EPS of $1.38 in the same period of 2019. Adjusted EPS excludes the impacts of the acquisitions, restructuring costs and the non-cash voluntary retirement plan charges.

	5
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

The third quarter operating margins declined compared to the same period last year as a result of cost incurred related to the low rate of MAX production, including excess capacity costs of $73 million, as well as lower production rates across almost all of our commercial programs, due to the impacts of COVID-19.

For the quarter, we recognized restructuring expenses of $20 million for cost alignment and head count reductions as well as forward loss charges of $128 million primarily driven by the lower future production rates announced on the 787 and A350 programs. I'd also like to note that our total segment operating margin normalized to exclude changes in estimates improved significantly over the last quarter. This quarter-over-quarter improvement demonstrates the effectiveness of the many cost reduction actions we have implemented this year. We expect to continue to recognize these benefits as we move into the future.

During the third quarter we evaluated additional schedule and demand information received from our customers as well as other market and analysts data, and as a result adjusted the results on the 787 and A350 programs to include a lower rate of production for a longer duration compared to our previous forecast. This resulted in an incremental fixed cost absorption on the 787 and A350 programs. And as a result, we recorded forward losses of $65 million on the 787 program and $45 million on the A350 programs during the quarter.

Additionally we recognized $18 million of forward losses on other programs including the 747 and [ph] 76 (13:43) program, which was primarily due to production rate decreases on this 777 program. Our year-to-date tax rate was approximately 38%. As discussed last quarter as a result of the CARES Act, we can carry back our anticipated 2020 net operating loss to years where we pay tax. This has created a favorable year-to-date tax rate compared to our expected normalized rate.

Now turning to free cash flow on slide 6, free cash flow for the quarter was a use of $72 million compared to a source of $214 million in the same period of 2019, this year-over-year decrease is primarily due to the negative impact of working capital requirements and significantly lower deliveries across all of our commercial programs, partially offset by favorable cash tax. The third quarter free cash flow was also impacted by $17 million of restructuring costs, as well as $11 million of cash used to unwind the term loan interest rate swaps.

Additionally the third quarter of 2019 free cash flow included $123 million cash advance received as part of the April 2019 MOA reached with the Boeing Corporation. Free cash flow improved by about $175 million from the last quarter. This quarter-over-quarter improvement was a result of the benefit from the cost reduction actions we have taken throughout the year, a decrease in our working capital requirements, as well as some favorability from the timing of certain deliveries in the quarter. We anticipate cash flow use in the fourth quarter to be slightly higher than what we have recognized in this quarter, primarily due to higher interest on additional debt and some favorable timing of deliveries that are not expected to repeat in the fourth quarter. Excluding Bombardier, we anticipate full year cash used in operating activities to be around $700 million to $800 million, with approximately $120 million of capital expenditures. In other words we expect free cash flow for 2020 to be around $800 million to $900 million of outflow which is in line with our expectations and our commitments to you in the last quarter.

We are quickly diving into the Bombardier integration and analyzing the appropriate structure for the business. There will be a one-time cash outflow of $35 million in the fourth quarter relating to restructuring activity. Finally as Tom mentioned in his remarks, our 2021 free cash flow will continue to be negative, but significantly improve from 2020 excluding cash tax benefits. We are expecting a cash tax benefit of approximately $300 million as a result of the carryback permitted by the CARES Act and anticipate receiving a majority of this benefit in 2021. This will provide cash benefits in 2021 above and beyond our year-over-year operational cash improvement.

	6
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Let's now turn to cash and debt balances on slide 7. During the quarter, we announced the termination of the ASCO acquisition along with new financing activity. We raised $900 million of first lien senior secured debt including $400 million term loan B and $500 million in notes due in 2025. In connection with the closing of this new debt, we terminated the existing senior secured credit facility including the revolver.

Prior to the termination on September 30 we paid off the term loans that had remaining balance at the end of the second quarter of approximately $430 million. This financing activity along with the ASCO acquisition termination and Bombardier price reduction improved our overall liquidity position by $1.2 billion and provides us with additional balance sheet and operational flexibility. We ended the quarter with $1.4 billion of cash and $3 billion of debt. These balances reflect the termination of the prior credit facility including the payoff of the term loans but the cash and debt balances do not reflect the $900 million of new senior secured debt as those funds were not received until just after the end of the quarter. Including the capital raise and cash used for the Bombardier acquisition, the adjusted cash balance at the end of the quarter would be $2 billion. The debt balance adjusted for the $900 million debt raise and would result in a total debt balance of $3.9 billion. We believe our cash balance provides ample liquidity to navigate the uncertainty within our industry.

Now let's turn to our segment performance on slide 8, the Fuselage segment revenue in the quarter was $421 million down compared to the same period of 2019, primarily due to lower production volumes on 737, 787 and A350 programs. Operating margin for the quarter was negative 23% compared to 11% in the same period of the prior year. This decrease was primarily a result of forward losses recognized on the 787 and A350 programs and lower profit recognized in the 737 program, including excess capacity costs for $42 million. The Fuselage segment recorded $9 million of favorable cume catch-up adjustments and $92 million of net forward losses during the quarter.

On a normalized basis after reversing change in estimate impacts, Fuselage segment margin improved to negative 3% in the third quarter compared to negative 20% in the second quarter, reflecting the benefits of cost reduction initiatives we have completed this year.

Propulsion revenue in the third quarter was $171 million, down compared to the same period last year primarily due to lower production volumes on the 737 and 777 programs. Operating margins for the quarter was negative 9%, compared to 21% in the same quarter of 2019. The segment recorded $5 million of unfavorable cume catchup adjustments and $15 million of net forward losses. The decrease in segment profitability and operating margin was primarily a result of lower margins recognized in the 737 program, including excess capacity costs of $18 million and the reduction in production rates on the 777 program.

And finally Wing revenue was $168 million down compared to the same period of 2019, primarily due to lower production volumes on the 737, A320 and A350 programs. Operating margin for the quarter was a negative 14% compared to positive 14% in the same quarter of 2019. The segment recorded $22 million of net forward losses. The decrease in segment profitability and operating margin was due to forward losses recognized in the 787 and A350 programs and lower margin recognized on the 737 program including excess capacity costs of $13 million.

In closing, this has been a very challenging year for Spirit. We have taken difficult, but necessary actions to adapt to the changes brought on from both the MAX grounding and COVID-19. We continue to assess potential future scenarios to identify areas of opportunity and develop action plans to mitigate risk.

The $900 million capital raise along with the termination of the ASCO acquisition and the Bombardier price reduction strengthens our liquidity position and enhances our ability to address future challenges. Further we will

	7
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

continue to stay focused on our growth and diversification strategies. The acquisition of Bombardier is a significant event for us and we look forward to making them a big part of the Spirit team.

With that I'll turn it back over to Tom for some closing comments.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thanks, Mark. And I'll make some closing comments before we take questions. Given the significant changes to the global aviation industry resulting from the COVID-19 pandemic, Spirit has taken substantial cost reduction actions to align to lower levels of production. These actions include the reduction of 8,000 employees on commercial programs, closure of several facilities, and the reduction of other non-labor spend.

In total, the annualized cost reduction actions have exceeded a $1 billion or 40% of our nonmaterial base. We've also made substantial improvements in our manufacturing processes to improve digitization, automation and process flow. Spirit also took several actions to strengthen our liquidity position. We mutually terminated the ASCO acquisition, repaid our term loans and cancelled our 2018 credit facility, raised $900 million of first lien secured capital, and closed the acquisition of Bombardier's aerostructures assets for $275 million, a cash reduction of $225 million from the original amount. The Bombardier acquisition also accelerates our strategic transformation with additional work on Airbus programs, aftermarket, business jets, engines and defense. The acquisition also brings low cost manufacturing operations in Morocco. We've taken these significant steps during a very challenging time in the industry, which will allow us to emerge as a stronger more diversified company.

With that we'll be happy to take your questions.

QUESTION AND ANSWER SECTION

Operator: And at this time, we will now begin the question and answer session. [Operator Instructions] We ask that you please limit yourself to one question. And our first question today will come from Myles Walton with UBS. Please go ahead.

Myles Walton

Analyst, UBS Securities LLC

Thanks, good morning. You've tackled a lot of issues in the quarter so it's not an easy job where you sit. I was wondering if you could talk about the underlying margins excluding the forward losses and cumulative changes. It looks like your segment margins were about breakeven and curious if that's sort of the underlying business right now at these low levels, you're breaking even and then maybe more detailed just a one-off on the A350, the size of the forward loss, there seems to be about double of what was in the debt offering disclosure and I'm just curious what changed there, because it looks like you were assuming five per month back then as well.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Well, I'll start off, in terms of the margins, you're right. We have made some substantial improvements quarter- over-quarter. I mean, obviously deterioration year-over-year because of the reduction in production rates, but the cost reduction actions are starting to take hold and so even at very low levels of production you start to see the margin improvement.

	8
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

So for example right now effectively for 737, we're at a 7 [ph] APM (25:44) rate, and 777, we've dropped now to about two per month; on 787, we're still at 10, but that's dropping to 6, so even with all those headwinds you saw the margins improve on the 737 program on a normalized basis last quarter at negative 20% to this quarter at negative 3%. So almost break even, so we're pretty happy about that. Now the forward loss on the A350 program was really just due to rates, when we originally made the estimate of what we thought the forward loss was going to be, we were working on the assumption that the rate was going to drop from 10 to 6. But in fact Airbus dropped it to 5 for at least a six month period beginning in kind of the September timeframe. So when we took that into account that drove the higher forward loss than we predicted at the end of last quarter. Mark, anything else to add?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

No, I think, you hit it right Tom. The A350, Myles, really was due to the fact that between now and the end of the year and mainly through next year we're really going to be producing at about 4.5 per month and when we originally made the assessment it was in the - forward losses in the 5 to 6 range, and so you know we've had to take that into account and also with that lower level of production it's had a negative impact not only on Section 15, but also our fixed leading edge program.

Myles Walton

Analyst, UBS Securities LLC

Okay. All right. Thank you.

Operator: And our next question will come from Carter Copeland with Melius Research. Please go ahead.

Carter Copeland

Analyst, Melius Research LLC

Hey, good morning, gentlemen.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Good morning, Carter.

Carter Copeland

Analyst, Melius Research LLC

Just a question on cash from what you've sort of disclosed about next year. Based on this year's guidance sort of $850 million out, you get the cash tax benefits of $300 million and the cost out isn't quite there. But I don't know call that $200 million. It kind of gets you to low single digit hundreds of millions out. Are there other pieces that I'm missing and I guess specifically with that what should we expect from a cash standpoint on the Bombardier assets in your view? Thanks.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. Well, first of all, as you know the cash usage for this quarter was $72 million. Mark said, it's going to be quite a little bit higher next quarter. As we go into next year, again with our current forecasts 737 production should be higher than this year, but it's very dynamic. So we'll see some headwinds on the twin aisle programs.

	9
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

But by and large we don't expect the cash usage per quarter to exceed what we've seen in kind of Q3 and Q4. So, so you're right with the cash tax benefit of $300 million that'll put us in kind of single digit to right around the $100 million net usage and perhaps better depending on performance. What it doesn't include is Bombardier, still digging into it. But we do expect Bombardier to be positive. We've got some work to do there as we look at their capital expenditures and their R&D and things like that. And we align it to our programs and as well as we start to drive synergies particularly in the supply chain. So we expect it to be positive. Don't know yet how much. But I think, your analysis in terms of where we will be for cash flow next year including the cash tax benefit is about right.

Carter Copeland

Analyst, Melius Research LLC

Great. Thank you for the color, Tom.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thanks

Operator: And our next question will come from Robert Spingarn with Credit Suisse. Please go ahead.

Robert Spingarn

Analyst, Credit Suisse Securities (USA) LLC

Hi. Good morning. My question is going to be on Bombardier. But before we go there just to clarify based on the moving pieces and where rates are now at - and what quarter Tom or Mark, do you expect just based on current planned rates. No changes, would we see trough revenues, because it sounds like some rates are still trending down, on the wide bodies and of course Bombardier is a little bit obscure, so that's the first question. Second question is why did Spirit and Bombardier value the deal somewhat differently? Bombardier talked about some favorable adjustments on the forward business.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Yeah, so first off, as it relates to the trough from a revenue standpoint, I would tell you that we expect the trough is behind us. The revenue that we generate in the second quarter of 2020 or this year, we expect that to be our low point and as you saw here where we've made slight improvement here in the third quarter and then as we move into next year, we have to adjust for some of the twin aisle pressure next year. But the expectation is 737 will be a little bit higher next year, which will help offset that. So I think, we're in a good position as we move forward here to slightly start to see revenues move upward as we move into 2021 and even stronger into the back half of next year based on the OEM data that has been provided to us. And then specifically as it relates to Bombardier's press release and how they characterized. All I can tell you is that Bombardier accounting is due to IFRS, Spirit uses US GAAP, and how they calculated their liabilities or record the deal values is really up to them and their accountants. I can tell you that we used our accountants and our actuaries to assess the pension obligation liability and the repayable launch agreement and then the cash proceeds. So when we finalized the purchase accounting here and establish the balance sheet at the end of October we're very comfortable with our accounting assessment as it relates to what the value of the deal is. I wish I could connect the dots more for you, but they probably had some different assumptions than we did. But we do know that our deal value in the enterprise and what the liabilities will establish on our books is consistent with US GAAP.

......................................................................................................................................................................................................................................................
	10
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Mark J. Suchinski	A
Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

It really gets down to how they value the pension obligations in IFRS versus how we did in US GAAP. That's the difference.

Robert Spingarn

Analyst, Credit Suisse Securities (USA) LLC

Okay. Just the last part - just Tom on the exclusivity that you have there did that - is that part of some kind of a pricing arrangement or should we see similar profitability in that business to what we would normally expect from Spirit.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Yeah. Well, the exclusivity is that we have sole source life of program agreements on the parts that the Belfast operations currently supplies to Bombardier on their business jet programs and the profitability is slightly accretive on those programs to Spirit's normal profitability margins.

Robert Spingarn

Analyst, Credit Suisse Securities (USA) LLC

Okay thank you very much.

Operator: And our next question will come from Kristine Liwag with Morgan Stanley. Please go ahead.

Kristine Tan Liwag

Analyst, Morgan Stanley

Hi, good morning, guys.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Good morning.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Good morning.

Kristine Tan Liwag

Analyst, Morgan Stanley

For the Bombardier assets that you've acquired. Can you discuss the free cash flow profile of these businesses and then now that you've closed the deal, what your priorities are in the next year?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Yeah, Kristine, I'll address the cash flow, and then I think Tom will kind of talk a bit about the business next year. But the reality is this, their business has been - it's our business now has been impacted by COVID-19, so obviously there's going to be lower revenues than we initially anticipated when we signed the purchase

	11
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

agreement there, and we just closed the deal a few days ago. Our teams just hit the ground on Monday and Tuesday I've got my financial team diving into the details as it relates to the next couple of months.

We'll be working with them over the next month or so to establish a new operating plan for 2021. They had a plan previously and expectations with their former parent company, and as we think about the integration and the synergies and where that business is going on a go forward basis we expect decent revenues as it relates to the business jet side of things. I think, we've got good line of sight to A220 and we're really pleased with the aftermarket part of the business. So we're not yet going to really get into details as it relates to where we think their cash flow is going to go next year and how it's going to contribute, just specifically we'll factor that into our guidance when we talk to you guys at the end of January. But it's really in the early days of the Bombardier acquisition and our teams are working in earnest as it relates to the integration and the synergies. But we're really pleased about that business and what it could offer from a value proposition for Spirit.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right, and Kristine in terms of priorities for the business, first and foremost is integration, it's a new acquisition it's a big one, it's the biggest that Spirit has ever made and so we have a fairly large integration team working on all the normal things in terms of finance, HR, information technology, driving all of those things. Second big focus is going to be on capturing synergies and that's part of the integration effort. But specifically looking at supply chain, facilities optimization, overhead and particularly in supply chain with Spirit we bring a lot more critical mass and scale with suppliers and so we'll start integrating those opportunities and leveraging our existing supply base to get more competitive opportunities as we go forward. Operationally the A220 of course is a huge program. It's the entire integrated wing using that resin transfer infusion technology for fabrication that I mentioned in my prepared remarks, and we're going to be looking very hard at the production process, the flow, material waste and looking at ways we can optimize the production and drive further productivity in it and then the other big thing is aftermarket. This acquisition more than doubles our aftermarket business and it gives us

[Technical Difficulty] (00:36:31 -00:37:17)

Operator: Pardon me. This is the conference operator speaking. Just please hold on the line momentarily.

[Technical Difficulty] (00:37:22-00:38:05)

Operator: And then - pardon me. This is the operator. I'll just - one moment while we connect the speakers.

[Technical Difficulty] (00:38:10-00:38:46)

And then pardon me. I've - we have - the speaker location has been connected to the call.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

This is Tom again. I'm sorry, we must've dropped off. So moderator could you let know where did we stop, did they hear my response to Kristine's question.

or perhaps you could let us

Operator: You were giving your response to Kristine's question. However, if you - I have reopened Kristine's line, if you would like to re-answer that question again.

......................................................................................................................................................................................................................................................
	12
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Thomas C. Gentile	A
President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

So, Kristine, let me - I'll just start over and.

Kristine Tan Liwag

Analyst, Morgan Stanley

Okay.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Make sure we get it in fully.

Kristine Tan Liwag

Analyst, Morgan Stanley

I think, the part you dropped off was on your question about aftermarket, that's the part when [ph] your line went off. (39:21)

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. So aftermarket is going to be a big focus for us with this acquisition and Bombardier's assets more than double our aftermarket revenue. And so we've always historically been very strong on Boeing repairs for flight control surfaces, nacelles and thrust reversers in the US market. And the Bombardier business was always very strong on Airbus flight control surfaces, nacelles and thrust reversers in the European market. So those two things come together very nicely and complement each other, and will more than double our aftermarket business. And as I said in my prepared remarks our aftermarket revenue now becomes 8% of our total. And we have substantial growth opportunities in the future. So this becomes a significant opportunity for Spirit to start to realize more revenue and income from aftermarket activity.

Kristine Tan Liwag

Analyst, Morgan Stanley

Thank you.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Okay. Thanks Kristine.

Operator: And our next question will come from Sheila Kahyaoglu with Jefferies. Please go ahead.

Sheila Kahyaoglu

Analyst, Jefferies LLC

Hi. Good morning, guys, and thank you. Just a follow-up on Kristine's question maybe sticking with Bombardier. Your EV on the deal fell 35% or so, but the implied EBITDA fell 50%. So I guess, how do you think about how you've risk adjusted the exposure here given it's mainly A320, 220 and biz jet exposure. And how do you think about those program outlooks appreciating Tom that the deal just closed and you're going through the forecasting for it.

	13
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Thomas C. Gentile	A
President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

A few ways that we looked at it obviously we struck the deal last October, but the world changed with the pandemic. And Bombardier had certain expectations in terms of deal valuation. And we were looking for some relief given the changes in the market. So it was as you can imagine a rigorous discussion. And we arrived at a mutual conclusion that it was a 20% reduction in the total deal valuation. But if you look at the cash consideration it was a 45% reduction, so that's probably more in line with the EBITDA reduction that you just mentioned. The other elements of this is, it was always a three way negotiation with Airbus, because the pricing on the A220 and all the deliverables to Airbus had to be taken into account and Airbus was also very supportive in these discussions to make sure we could come to a mutually agreeable outcome.

So all those things taken into account we feel very comfortable with where we ended up in a deal valuation. So it's a win really for Spirit because we get a transformative acquisition. It's a win for Bombardier to get the acquisition closed, so they can move on with making their business more focused on business jets, really a win for Airbus and that they now have clarity in terms of their A220 particularly on the full integrated wing, and we would say it's a win for the workforce in Belfast, Casablanca and Dallas because they now have certainty as we go forward.

Sheila Kahyaoglu

Analyst, Jefferies LLC

Okay. Thank you for clearing that up. Apologies for that reversal.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thank you.

Operator: And our next question will come from Doug Harned with Bernstein. Please go ahead.

Douglas S. Harned

Analyst, Sanford C. Bernstein & Co. LLC

Thank you. Good morning.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Good morning, Doug.

Douglas S. Harned

Analyst, Sanford C. Bernstein & Co. LLC

Last week Airbus talked about they basically - letters that it had sent out to suppliers on rate increases for the A320 Neo from 40 to 47 a month, and they said that this - they had been planning for suppliers to be ready for such an increase in Q2 next year, they moved that back to Q3 next year, what I'm interested in as you're the largest structural supplier on the A320 Neo and when you get a message like that that you should be ready for this rate increase. How do you think about responding, what do you do and what did it mean that they moved this back from Q2 to Q3 from a Spirit standpoint?

	14
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Thomas C. Gentile	A
President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

So the letter and we had calls with their senior leadership on this topic is the way they characterize it is they asked us to protect rate 47 for the back half of the year. So the current schedule is rate 40. But they asked us to protect for 47. So that means to make sure that we have all of our capital and tooling in place. That we're prepared to increase the workforce two or three months in advance of that and that we also have line of sight to material, particularly long lead material like forgings if the rate does go up, and they would give us enough advance notice to put those things into effect. But protecting the rate means you have to be prepared to go there if they decide to make that move. Now obviously the market is very dynamic right now. They have talked with all of their individual airlines and created a new skyline based on when airlines can take delivery and when they will take delivery. So they've been very diligent about the way they have constructed their schedule and what they've communicated to their suppliers. And they're effectively just giving us advance notice to be prepared if the rate does go up. The fact that it shifted three months doesn't really impact us. It just means that we push that lead time out. So we have done what they've requested. We are protecting for rate 47 in the back half of the year Q3 now. And if they do decide to go up we'll be prepared.

Douglas S. Harned

Analyst, Sanford C. Bernstein & Co. LLC

And does the going up mean is this - I mean, what does that exactly mean that you would be within whatever quarter that is able to deliver in that quarter or does it mean that you would be kind of set to go. I'm sort of not sure what for you what - how to tie your rate to their rate, I guess that's the thing I'm trying to understand.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

So typically on the A320, if they announced a rate of 47, we would be delivering at that rate during that period of time. So, as they said on the call, I think, said October. So, if they decide to go in October we'd be prepared to deliver 47 shipsets in October.

Douglas S. Harned

Analyst, Sanford C. Bernstein & Co. LLC

Okay, okay Very good. Thank you

Operator: And our next question will come from Ken Herbert with Canaccord. Please go ahead.

Ken Herbert

Analyst, Canaccord Genuity LLC

Good morning, Tom and Mark.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Good morning.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Good morning.

	15
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Ken Herbert	Q
Analyst, Canaccord Genuity LLC

I wanted to see Tom if you can provide any more detail on the glide path for the 737 from - it sounds like you're at seven a month now to the call it 26 a month at the end of 2021 or early 2022 if you sort of lag by five a month, if you can provide any more detail on sort of rate breaks over the next several quarters on that and when you expect to catch up with Boeing on 737 rate?

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Well, Boeing has provided guidance that they think that their production rate will be at 31 per month by early 2022 and as we've said we're going to lag them by about five aircraft per month to burn down the inventory that store here at Wichita. Right now we're in the process of ramping up to 10 aircraft per month for January. So we're in the process of getting all of our head count and material orders and supply chain aligned for that, within that we don't have much other guidance other than what Boeing would provide. It's a very dynamic environment and we will be guided by what Boeing tells us, but that's how we're planning right now is, we'll be at 10 by January, they will be a 31 by early 2022 and we're going to lag them by about 5 per month, in terms of the catch up based on the current schedule it looks like we would burn down the 130 or so the 128 units that we have in buffer now to 20 to 25 by mid-2022. And then we'll keep that buffer of 20 or 25 units just to cushion the production system, so that we don't have any disruption that could upset Boeing's production line in Everett. So, that's the plan.

Ken Herbert

Analyst, Canaccord Genuity LLC

Great. Thank you.

Operator: And our next question will come from Seth Seifman with JPMorgan. Please go ahead.

Seth M. Seifman

Analyst, JPMorgan Securities LLC

Well, thanks very much, and good morning. I wonder if maybe I could ask - sneak too in here, but one - on the Boeing 737 with the current workforce. How high can production go with the workforce that's at the size that it is now? And then just real quick on Bombardier and the A220, how should we think about where the rate needs to go on that program before it becomes - before it starts to contribute at a solid cash margin.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. Well, on 737 our current workforce is aligned to our current production rate, which is seven aircraft per month. And as I said, we're getting ready to go up to 10 by the beginning of the year. So, I mentioned the ventilator program, as that's winding down we're transferring some of those people back to the 737 program so that we are ready to go to 10 in January. So, currently at a rate of seven and going to 10.

In terms of Bombardier, the A220, the current rate is about four per month, and we're going to be prepared in the future to go up to 14 per month. But we'll be guided by again what Airbus decides in terms of how fast they'll ramp that up.

In terms of profitability, we will need to dig into it to figure out where exactly the breakeven points are in the profitability, but it's going to be a good program overall, the outlook on it is very good. As I mentioned it's one of

	16
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

the smaller segments of the narrow body market and the narrow body market is recovering. For example China and Russia on the domestic aircraft flights, air traffic are already above 2019 levels. So we expect to see the same in Europe and the US as that domestic travel will recover first that will favor narrow body and with overall levels of traffic lower than they were in the past, a smaller narrow body like the A220 should do very well. So we expect that Airbus will hit their long term production rate commitments on it and we will be ready to meet those commitments and as we get further into it I think we'll have a better sense of what the profitability breakeven points are.

Seth M. Seifman

Analyst, JPMorgan Securities LLC

Great. Thanks Tom.

Operator: And our next question will come from Jon Raviv with Citi. Please go ahead.

Jon Raviv

Analyst, Citigroup Global Markets, Inc.

Thanks and good morning. Back to cash, you know can you talk a little more specifically Tom about what you need to see in 2021 for cash burn to be significantly better and then same thing what do you need to see for cash breakeven in 2022, what's in your control, what's not in your control. It strikes me that narrow body is clearly very important, you talked about Airbus, you're talking about MAX a lot, but Boeing is talking about slower deliveries in 2021 which would therefore constrain their production which there would therefore constrain your product - your deliveries. So just a little bit more on what's in your control whereas what's not in your control, and what production rate do you have to hit to actually make cash on each 737? Thank you.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. So as you said I mean what's in our control versus what's not in our control. What's in our control is our cost reduction actions and we need to continue to execute on those. We've got a lot of them are already in place, but we need to maintain that vigilance. We also need to continue to drive productivity in our factories with what I mentioned things like digitization and automation, robotics, factory floor automation. So, those are the things that are in our control to drive. And we are definitely going to continue to drive those. Things not in our control and really the biggest driver for cash flow in 2021 is going to be production rates, particularly on the 737. Obviously the 737 is our biggest program. We make 70% of the structure. Last year it accounted for half of our revenue. This year we only produced 72 units versus 606 in 2019. So if that recovers and it is supposed to recover from this year according to Boeing's current projections that obviously will drive improved cash flow for next year. Even with the headwinds of some lower rates on the wide bodies like the 777 and the A350. But this is a very dynamic environment and lots of things could change. Obviously we're still waiting for the MAX to get back into service. It's promising. It's encouraging but that needs to happen. And the FAA has said there's no timetable on that. But they have said a lot of positive things about it. Still [indiscernible] (52:18) by the way which is encouraging.

So we need to see that and then of course the pandemic. People are starting to fly more domestically in places like China and Russia. But with the recent surge it creates more uncertainty. So once the - a vaccine is in place that will obviously give a greater focus. And also the development of these private healthcare corridors or travel bubbles that you start to see developing between different countries which should help stimulate some international traffic. So those I think are the key issues for 2021. And frankly for 2022 as well. We've got to continue to drive our cost reduction actions but we need to see single aisle production rates increase as air traffic recovers around the world.

	17
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Mark J. Suchinski	A
Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Yeah. Jon, just to kind of add to what - what Tom said we're - with all the reductions in production rates this year we really do when you think about delivering 72 737s, we're really kind of at the trough right now of production volumes. Even a modest improvement in 737 deliveries next year will create some tailwind and accretive benefits for us.

So as we said before some of the drag of working capital that consumed quite a bit of cash here in 2020 will not repeat. I expect working capital to be a bit of a tailwind. A little bit of benefit from 737 next year. And as we said before from an operational standpoint we expect our cash flow to be significantly better year-over-year. More than half of our cash burn here in 2020 is working capital related and that will not repeat next year. We'll get a little bit of benefit there. And when you think about it harder, kind of did some good math on where we think cash flow is so significant improvement next year even with the low production volumes the cost reduction activities are taking place. You see it in our cash usage this quarter. So we're going to continue to go battle the cost reduction side. But we also I think have some real opportunities on the working capital. I can think we can do a better job next year on inventory management which will potentially give us some additional tailwind on the cash flow side. And if the market predictions come true we're looking at some modest recoveries back half of next year and into 2022 that will help on the operational front. And then we've - you know as we said - it's kind of a pro and a con but the operating losses this year will generate some sizable one-time cash tax benefit in 2021. And that will create some additional liquidity or cash to help us work through the challenges here. But we feel good about where we're at and where we think cash flow is going to be next year, significant improvement and then as Tom indicated, we get a little - some help here in the vaccination and their narrow-body starts to recover, we can be back in business generating free cash flow in 2022.

Jon Raviv

Analyst, Citigroup Global Markets, Inc.

Thanks.

Operator: And our next question will come from George Shapiro with Shapiro Research. Please go ahead.

George D. Shapiro

Analyst, Shapiro Research LLC

Yes. Good morning. I just wanted to go back to last year Bombardier was going to do about a $1 billion of revenues in 2019. What is that number this year? I know you mentioned on the call, it'll go up to $700 million plus next year. So, I'm just trying to get the comparison here as to what...

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Well, you're right. Last year was about $1 billion. This year with the impact of COVID, we're just getting to look at the books from the standpoint of closing the deal. Looks like it will be $700 million to $800 million and then a recovery to the $1 billion in the 2022 time period, but that's what we see right now.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

	18
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Yeah. George, to be more specific, this year we're looking at $600 million to $650 million. That's what we're projecting for the year. And then next year to, $700 million to $800 million. So, just a little bit of modest improvement next year before we start to see revenue start to climb back up in 2022.

George D. Shapiro

Analyst, Shapiro Research LLC

And just on the 737, what happens if Boeing further delays the increase to the 31 per month rate, because certainly, they've got a lot of planes to deliver. They've got a lot of grounded planes. So, I just wanted to see how you react to that.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Well, we will respond to their production rate and we'll lag them by at least five per month. And if the rates are lower than we're expecting, this will align our cost accordingly.

George D. Shapiro

Analyst, Shapiro Research LLC

Okay. Thank you very much.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Thank you, George.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thank you.

Operator: And our next question will come from David Strauss with Barclays. Please go ahead.

David Strauss

Analyst, Barclays Capital, Inc.

Thanks. Tom, I was wondering if you could just specify exactly what you're assuming for MAX production in 2021 that you've got reflected in your commentary around 2021 free cash flow. And then looking beyond the MAX, the other important platforms, 320, 350, 787. You're currently delivering well - you're delivering into the manufacturers of well above their own delivery rate at this point. So, how much risk is there that you actually have to drop your production rate on those programs, actually have to drop below the manufacturers' stated production rates going forward? Thanks.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. Well on the other programs, our rate tends to line up to the manufacturer's rate, so Airbus and Boeing, and when they give us a schedule, we deliver to it. And so, those are pretty closely aligned. And on the 320, Airbus has been very clear they are at a rate of 40 right now, which is going to continue into next year. They've asked us to protect for 47 in the October timeframe and beyond. The A350 is right now at a rate of five. And that'll go into early part of next year, May, June and then go back up to six. 787, right now is a 10 and it's supposed to go to the

	19
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

six in about the March timeframe. And 777 is really down to two, 1.8. And those are all as what the manufacturers have stated, and we are aligned to those.

On the MAX, Boeing hasn't been specific yet about what the production rate will be in 2021. What they've said is, they expect to be to 31 by early 2022 and we're getting ready to go to 10 in January and so, we haven't really said what the specific rate will be for 2021 and we'll really wait and see what Boeing does. We don't want to get out ahead of them, it's obviously a very dynamic environment. They're working really hard with the airlines and they've given some guidance to the market. And we're following that guidance and we're making sure that we align to the schedule that they've given us.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Hey, David, I think your point though is Boeing and Airbus, Boeing on the 787 has built up some units that they haven't delivered yet. Airbus has some as well. Again, that's really kind of outside of our control. They've asked us to produce, we're delivering, and we know that there's a lot of uncertainty as we move into 2021. I think production rates are still dynamic and as we've acted very quickly this year, if there are further rate reductions, we will be forced to have to take additional workforce reductions and continue to focus our cost to align with the production rates where you have a highly variable cost structure here and the best thing that we can do is production rates are out of our control and if they go lower because of the situation that you just addressed, we're going to have to take further workforce actions and we will continue to align our cost structure with the marketplace as we see it today and as you know, it continues to be dynamic because of COVID-19.

David Strauss

Analyst, Barclays Capital, Inc.

Thanks. And, Mark, one quick follow-up. Working capital in 2020, the $800 million to $900 million free cash flow burn that you're guiding to, what are you including in there and I mean as you look at working capital, what you call working capital, what are you assuming within that number for kind of negative or working capital burn in 2020?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Yeah. So, David, I would focus on receivables, inventory, accounts payable and accrued liabilities and profit sharing. Those are the big cash driving working capital items on our balance sheet.

David Strauss

Analyst, Barclays Capital, Inc.

Okay. And you think those are or the sum of all that in 2021 is a positive.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Slightly positive. Yes.

David Strauss

Analyst, Barclays Capital, Inc.

Okay. Thank you.

......................................................................................................................................................................................................................................................
	20
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Operator: And our next question will come from Cai von Rumohr with Cowen. Please go ahead.

Cai von Rumohr

Analyst, Cowen Inc

Yes. Thank you very much. So...

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Hi.

Cai von Rumohr

Analyst, Cowen Inc

When you first announced the Bombardier deal in October of 2019, I think you were talking of 6.5 times EBITDA with synergies, which if you kind of back it up to the $1 billion was like close to an 11% EBITDA margin. And now, you're talking of $600 million to $650 million in terms of revenues for 2020. And if I use the 7.3, it backs up to about a 12% EBITDA margin. So, a higher EBITDA margin after a substantial revenue drop. And then, if we're looking at next year, wouldn't the EBITDA margin go up if in fact the revenues are building as you hope?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Yeah, yeah. I mean when you think of it that way, I don't think that an EBITDA margin on any of our business at around 10% is unreasonable. I think we have a lot of opportunity from a cost standpoint. Tom talked about three or four major drivers that we think that we can take advantage of as it relates to the Belfast site. That could really help us from a profitability standpoint, from a cash flow standpoint. So, I don't it's unrealistic to assume that that business can generate 10% to 12%-plus EBITDA margins as we look at getting back to the higher revenues over the next one to two years here.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

And Cai, I would say we do think we can increase the EBITDA margin next year as we drive the synergies, particularly in supply chain.

Cai von Rumohr

Analyst, Cowen Inc

But so, if I look at this what is driving the revenues up because A220 is already at rate. I assume the [ph] 7,500 (01:03:37) is gone from aerostructures point of view 35 to 40, the aftermarket I guess could be flat to up, but I have a little trouble understanding what's driving the revenue up next year?

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Well, Cai, as we said, I indicated that we're looking at around mid-650s from a revenue standpoint that we're projecting $700 million to $800 million, $800 million if some of the business jet and aftermarket business holds and does outperforms kind of where our heads are. But I don't think when you think about an increase in revenue from $650 million to around $700 million that we're talking about a substantial drop, right. A little bit of benefits on the business jets side, I would expect that the [ph] 7,500 (01:04:28) will deliver a few more units, will produce a

	21
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

few more next year. We got a little bit of lift on the aftermarket side of things, right and as it relates to some of the discussions that we've had with Airbus on price et cetera, could add some value as it relates to the A220 program.

Cai von Rumohr

Analyst, Cowen Inc

Thank you very much.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Sure.

Operator: And our next question will come from Hunter Keay with Wolfe Research. Please go ahead.

Hunter Keay

Analyst, Wolfe Research LLC

Hi. Thanks for getting me on. Quick follow up to that last comment, Mark, when you talked about, I was going to ask you what your shipset content was on Airbus 220 prior and pro forma, so I'd be curious about that. And then, the second one is, Tom, what's your primary metric for how you measure employee productivity. Thank you.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Sure, Hunter. Real quick on the work statement on A220, today as it relates or the new A220 work that we're going to capture as part of this acquisition is, Tom talked a lot about the fully and graded composite wing. But there is some potential fuselage works, some center wing box work to complement our propulsion package that we have on the A220, the pylons. So, we're starting to have some sizable work statement as we add the work content from the Bombardier acquisition.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. Hunter, and then to get employee productivity, I'll focus on direct labor productivity. Our major metric is hours per unit, which we look at across every program and continue to work on that. And we look at - we call it do what to do. But it's a realization metric, which is for the hours scheduled today for a particular unit, how many did we complete. So, what was our effectiveness at executing the workload for today that was scheduled, so hours per unit and what we call do what to do. And we look at those metrics across all of our programs on a daily basis.

Hunter Keay

Analyst, Wolfe Research LLC

Thank you.

Operator: And our next question will come from Ron Epstein with Bank of America. Please go ahead.

Ronald J. Epstein

Analyst, Bank of America Merrill Lynch

Hey, good morning. So I wanted to discuss [indiscernible] (1:06:54) how you're restructuring the business and so on and so forth. Can you restructure how you do contracts? You've got more downside protection if another

	22
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

downturn like this were to happen again, I mean, is there a way to do these things, so below a certain point you're cost plus or something because I mean the situation we're in I suppose is a once in a lifetime thing but it might not be, right. I mean is there a better way to build downside protection into your contracts with the OEs.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Well, I mean certainly you can try there. They're good negotiators. But the one thing I would say is, our biggest program is the MAX. And as we've said before, our MAX contract is indexed to rate. So as rates go down our price went up. And that's probably the best way to protect yourself in the event of a downturn, because you just can't anticipate these things. But in that case that contract being our biggest contract that was a good contract, if you will, mechanism that helped with this downturn.

Short of that - we always work with our customers in terms of what are the best terms and conditions that make sense in the market, and that we can live with. So there's always a large focus on quality and delivery. It's difficult to protect normally against downturns like this. I mean this is a once in a millennium type of situation, but for our longer term contracts we also build in some escalation protection as well. So lots of different things that you can do. And it's always a negotiation based on what market conditions are and what the needs and requirements are of both parties at the time.

Ronald J. Epstein

Analyst, Bank of America Merrill Lynch

And if I may on Boeing 787 specifically I think you said at one point you guys would be cash flow breakeven in

2022. When does that happen now, I feel like 2024, 2025, I mean like...

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

What we said is positive in terms of cash flow and profitability when we get to line unit 1405, now originally that was in 2022-2023 time period, obviously now with lower rates of production that gets pushed out to the end of 2024, thereabouts.

Ronald J. Epstein

Analyst, Bank of America Merrill Lynch

And it's still 1405, that still same line number.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

That's it, yes.

Ronald J. Epstein

Analyst, Bank of America Merrill Lynch

Okay. Great, thank you.

Operator: And our next question will come from Noah Poponak with Goldman Sachs. Please go ahead.

Noah Poponak

Analyst, Goldman Sachs & Co. LLC

	23
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Hi, good afternoon everybody.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Hi, Noah.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Good afternoon.

Noah Poponak

Analyst, Goldman Sachs & Co. LLC

Quick clarification, and then a longer term question. The $800 million to $900 million of projected 2020 free cash burn that you've provided, does that include or exclude that I think you said $35 million to $40 million of Bombardier outflow in the fourth quarter.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

It does not include the $35 million, the $800 million to $900 million is what we told you guys on our second quarter earnings call. That's the legacy business excluding the Bombardier, I think we're going to be on the favorable side of that, and that does not include those one-time severance related cash costs that will be incurred on the Bombardier acquisition and we'll pay those out in November and December.

Noah Poponak

Analyst, Goldman Sachs & Co. LLC

Great. And then longer term, you've spoken to the mix change in the business from a revenue - percentage of revenue perspective, if we're looking three, four, or five years out, how should we think through the margin differential in defense versus aftermarket versus, I mean, I know it's different by airplane program and your original equipment business. But just in the pieces you're adding whether you want to frame it by defense versus aftermarket versus Bombardier assets just curious to hear you talk through the margin in those things that are mixing up.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Right. Well, as we go out for the next few years, obviously next year the MAX program is still lower. So we would expect the Boeing percentage of Spirit's revenue to increase again in the future as the production rates normalize.

In terms of margin, our older more mature programs tend to have higher margins as you would normally expect. But the defense margins are what you typically expect in defense contracts. They don't go as high but they also are more stable even in downturns. So those are in the kind of 12% to 14% range typically. So - and that's what we would expect as we go forward on defense. And as I said, this year our defense business grew 20%. Next year we're expecting 15%. And we've got line of sight to making it $1 billion business in 2022-2023 timeframe which is a little bit ahead of what we originally thought going back a couple of years ago.

	24
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

On aftermarket, margins and aftermarket typically are higher. If you think of typical Spirit margins of 16.5%, aftermarket would be higher. And as we go forward, it's going to be 8% of our business next year. As we go forward, it will continue to grow and become a bigger portion of Spirit's overall revenues in the future.

Noah Poponak

Analyst, Goldman Sachs & Co. LLC

Thank you.

Operator: And our next question will come from Peter Arment with Baird. Please go ahead.

Peter J. Arment

Analyst, Robert W. Baird & Co., Inc.

Yeah, thanks. Good afternoon Tom and Mark. Thanks for squeezing me in. Tom you gave a lot of details on Bombardier. On the synergy comment, the 6% in terms of expected synergies. Can you give out a rough timeline of when you expect to kind of achieve that and any kind of color you can give on that?

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

We're going to start immediately. But the full 6% will take us three years, was our original projection and we'll stick with that. Obviously with the pandemic, lots of things have changed. But we still see lots of opportunity and we feel good about a 6% number in over a three-year time period.

Peter J. Arment

Analyst, Robert W. Baird & Co., Inc.

Is the supply chain still the - one of the bigger opportunities that you kind of called out?

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Yes. We see that. And it's because Spirit has a lot of critical mass and scale in structures more so than Bombardier did. And so as we bring our suppliers into the mix, we expect that we'll be able to get to lot more competitive outcomes.

Peter J. Arment

Analyst, Robert W. Baird & Co., Inc.

Appreciate the details. Thanks Tom.

Operator: And our final question today will come from Mike Ciarmoli with Truist Securities. Please go ahead.

Michael Ciarmoli

Analyst, Truist Securities, Inc.

Hey, good afternoon gentlemen. Thanks for squeezing me on here. I guess just back to the working capital and cash flow, looking specifically at inventory I mean it continues to remain high, rates are lower. Should we just expect - you've got all that long lead material. Should we expect significant declines, looking at inventory contract assets, we didn't see too much of a change sequentially, but are you having luck slowing down your incoming raw materials, just trying to get a sense of where that specific line can go under these new reduced rates?

	25
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Thomas C. Gentile	A
President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Yeah. I mean, you see the balance sheet, you look at what our inventory balances are and our business is one half the size it was a year ago. We very quickly reduced - Boeing 777 got shutdown, we've gone through a series of production rate cut. From a master scheduling standpoint, it takes a little time for us to slow the schedule down, feed it back to our supply chain. So there's no doubt we're carrying actually inventory right now.

And so from a planning standpoint, as we factor our factory and the needs from a part consumption standpoint with what we have on hand, our supply chain team is working very diligently with our suppliers to align that up accordingly as we move through the rest of this year and into next year, and we saw some modest improvement in our inventory balances come down a bit between here at the end the third quarter compared to the second. I expect our inventories to continue to improve as we move through the fourth quarter.

And then in 2021, I do think from a working capital standpoint we'll see some benefits because we have a lot of the parts. We were prepared for higher rates and therefore we're going to - we have the parts we need and we'll consume them and we'll slow down the incoming receipt. Obviously we'll have to focus and we'll continue to work with our supply chain. We want to make sure our supply chain is healthy, and they're in a position to go up in rate late next year and into 2022.

So we really kind of got to balance both of that. We will definitely take advantage of, I think, making our inventory levels more efficient or more in alignment with what our current rates of production are. And so that will help out in 2021 as compared to where inventory levels are now.

Michael Ciarmoli

Analyst, Truist Securities, Inc.

Got it. Perfect. Thanks a lot guys.

Thomas C. Gentile

President, Chief Executive Officer & Director, Spirit AeroSystems Holdings, Inc.

Thanks, Mike.

Mark J. Suchinski

Chief Financial Officer & Senior Vice President, Spirit AeroSystems Holdings, Inc.

Thank you.

Operator: And this will conclude our question-and-answer session, also concluding today's call. We'd like to thank you for attending today's presentation. And at this time you may now disconnect your lines and have a great day.

	26
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Spirit AeroSystems Holdings, Inc. (SPR)	Corrected Transcript
Q3 2020 Earnings Call	03-Nov-2020

Disclaimer

The information herein is based on sources we believe to be reliable but is not guaranteed by us and does not purport to be a complete or error-free statement or summary of the available data. As such, we do not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of the information. You must evaluate, and bear all risks associated with, the use of any information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such informatio n. This information is not intended to be used as the primary basis of investment decisions. It should not be construed as advice designed to meet the particular investment needs of any investor. This report is published solely for information purposes, and is not to be construed as financial or other advice or as an offer to sell or the solicitation of an offer to buy any security in any state where such an offer or solicitation would be illegal. Any information expressed herein on this date is subject to change without notice. Any opinions or assertions contained in this information do not represent the opinions or beliefs of FactSet CallStreet, LLC. FactSet CallStreet, LLC, or one or more of its employees, including the writer of this report, may have a po sition in any of the securities discussed herein.

THE INFORMATION PROVIDED TO YOU HEREUNDER IS PROVIDED "AS IS," AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, FactSet CallStreet, LLC AN D ITS LICENSORS, BUSINESS ASSOCIATES AND SUPPLIERS DISCLAIM ALL WARRANTIES WITH RESPECT TO THE SAME, EXPRESS, IMPLIED AND STATUTORY , INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, COMPLETENESS, AND NON -INFRINGEMENT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NEITHER FACTSET CALLSTREET, LLC NOR ITS OFFICERS, MEMBERS, DIRECTORS, PARTNERS, AFFILIATES, BUSINESS ASSOCIATES, LICENSORS OR SUPPLIERS WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS OR RE VENUES, GOODWILL, WORK STOPPAGE, SECURITY BREACHES, VIRUSES, COMPUTER FAILURE OR MALFUNCTION, USE, DATA OR OTHER INTANGIBLE LOSSES OR COMMERCIAL DAMAGES, EVEN IF ANY OF SUCH PARTIES IS ADVISED OF THE POSSIBILITY OF SUCH LOSSES, ARISING UNDER OR IN CONNECTION WITH THE INFORMATION PROVIDED HEREIN OR ANY OTHER SUBJECT MATTER HEREOF.

The contents and appearance of this report are Copyrighted FactSet CallStreet, LLC 2020 CallStreet and FactSet CallStreet, LLC are trademarks and service marks of FactSet CallStreet, LLC. All other trademarks mentioned are trademarks of their respective companies. All rights reserved.

	27
1-877-FACTSET www.callstreet.com	Copyright © 2001-2020 FactSet CallStreet, LLC

Attachments

Original document
Permalink

Disclaimer

Spirit AeroSystems Holdings Inc. published this content on 03 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2020 16:50:02 UTC

Latest news about Spirit AeroSystems Holdings, Inc.

Global markets live: Heineken, AT&T Hasbro, Visa, Boeing...	Apr. 24
The return of bad news is good news	Apr. 24
Spirit AeroSystems to Receive $425 Million in Advance Payments From Boeing to Address Production Issues	Apr. 24	MT
Spirit Aerosystems to Get $425 Million in Advance Payments From Boeing Under New Deal	Apr. 23	DJ
Spirit, Boeing enter into memorandum of agreement to improve aero supplier's issues	Apr. 23	RE
Spirit AeroSystems, Boeing enter agreement to address aero parts supplier's cash flows	Apr. 23	RE
Top Midday Stories: Shares of GE, Novartis, Danaher and Philip Morris Up Post-Earnings; Pepsi Stock Down Post-Earnings; Apple iPhone China Sales Drop 19%; Trump Poised for Windfall From Media Company Stock	Apr. 23	MT
Boeing's Talks to Buy Back Spirit AeroSystems Progress Slowly Over Airbus Ties, Bloomberg Reports	Apr. 23	DJ
Boeing Bid for Spirit AeroSystems Muddled by Airbus Assets	Apr. 23	MT
Boeing Bid for Spirit AeroSystems Obstructed by Airbus Assets	Apr. 23	MT
Boeing Bid for Spirit AeroSystems Obstructed by Airbus Assets, Bloomberg Reports	Apr. 23	MT
Boeing to face questions on potential CEO candidates, Spirit talks	Apr. 22	RE
RBC Raises Price Target on Spirit AeroSystems Holdings to $33 From $28, Keeps Sector Perform Rating	Apr. 19	MT
Boeing's safety culture in spotlight at U.S. Senate hearings	Apr. 17	RE
Goldman Sachs Adjusts Price Target on Spirit Aerosystems to $31 From $26, Maintains Neutral Rating	Apr. 16	MT
Global markets live: Goldman Sachs, Apple, Salesforce, Boeing Tesla...	Apr. 15
Market outlook is uncertain, but optimism prevails	Apr. 15
Spirit Aerosystems Limits Hiring, Overtime Amid Boeing's Production Slowdown	Apr. 15	MT
Exclusive-Spirit AeroSystems limits overtime and hiring as Boeing 737 output drops	Apr. 12	RE
SPIRIT AEROSYSTEMS LOCAL UNION PRESIDENT SAYS OVERTIME FOR A…	Apr. 12	RE
SPIRIT AEROSYSTEMS LIMITS OVERTIME AND HIRING FOR SP…	Apr. 12	RE
SPIRIT AEROSYSTEMS SAYS IT IS ALIGNING PRODUCTION TO SUPPORT…	Apr. 12	RE
Susquehanna Adjusts Price Target on Spirit Aerosystems to $40 From $33, Keeps Positive Rating	Apr. 12	MT
Airbus CEO Says 'Not Unlikely' It Could Acquire Portions of Spirit Aerosystems from Boeing Following Merger	Apr. 11	MT
Airbus CEO Says 'Not Unlikely' to Take Some Spirit Aero Plants	Apr. 11	CI

Chart Spirit AeroSystems Holdings, Inc.

Duration

Period

More charts

Company Profile

Spirit AeroSystems Holdings, Inc. is a non-original equipment manufacturer (OEM) manufacturer of aerostructures, serving markets for commercial airplanes, military platforms and business/regional jets. The Company operates in three segments: Commercial, Defense & Space, and Aftermarket. The Commercial segment includes design and manufacturing of forward, mid, and rear fuselage sections and systems, struts/pylons, nacelles (including thrust reversers) and related engine structural components, wings, and wing components (including flight control surfaces), as well as other miscellaneous structural parts for large commercial aircraft and/or business/regional jets. The Company's Defense & Space segment includes design and manufacturing of fuselage, strut, nacelle, and wing aerostructures (primarily) for United States government defense programs. The Company's Aftermarket segment includes design, manufacturing, and marketing of spare parts and maintenance, repair, and overhaul services.

Sector

Aerospace & Defense

Calendar

2024-04-30 - Q1 2024 Earnings Release (Projected)

More about the company

Income Statement Evolution

More financial data

Ratings for Spirit AeroSystems Holdings, Inc.

Trading Rating

Investor Rating

ESG Refinitiv

More Ratings

Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

31.54 USD

Average target price

36.32 USD

Spread / Average Target

+15.14%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Other Aircraft Parts Manufacturing

	1st Jan change	Capi.
SPIRIT AEROSYSTEMS HOLDINGS, INC.	-0.76%	3.67B
SAFRAN	+31.82%	92.89B
TRANSDIGM GROUP INC.	+22.74%	69.04B
HOWMET AEROSPACE INC.	+19.55%	26.42B
HEICO CORPORATION	+14.47%	25.01B
MTU AERO ENGINES AG	+14.47%	12.86B
AECC AVIATION POWER CO.,LTD	-5.70%	12.97B
CURTISS-WRIGHT CORPORATION	+13.40%	9.67B
AVIC AIRBORNE SYSTEMS CO., LTD.	-8.50%	8.05B
MEGGITT PLC	-.--%	7.35B

Other Aircraft Parts Manufacturing

Spirit AeroSystems Holdings, Inc.

Equities

SPR

US8485741099

Aerospace & Defense

Spirit AeroSystems : Q3 2020 Earnings Call Transcript

EPS Revisions